The paradox of lender prejudice against sole practitioners

The
most common reason given by lenders to remove sole practitioners or
high street practices from their panel is that they are compelled to
take a more restrictive approach to their selection process all in the
name of their ongoing battle to combat mortgage fraud. 


The
irony of the aforementioned rationale is that the exclusion of the high
street solicitor obstructs the ideal of fraud prevention because the
solicitor’s personal knowledge of his client is the best defense against
the identity deception which enables fraud money laundering to be
perpetrated.  The commoditisation of conveyancing services around a
small number of big conveyancing factories seems likely to impersonalise
the operation and to promote the opportunity for mortgage fraud. In the
vast majority of conveyancing transactions conducted by ‘national’
firms there no opportunity for face to face meetings between client and
solicitor and a clever fraudster with resources can easily provide all
the passports, driving licences and utility statements that his or her
purposes require. The faceless dealing with clients is not only
acceptable, it is also becoming the norm due to the immediate advantages
of speed and economy.  Also, even when there are no villains involved,
one has to consider how many problem files achieved that status in
conjunction with and possibly because of there having been no or
insufficient personal contact with the client for all necessary issues
to be addressed.


Just in case a Lender reads this article here are a few points and questions for them to think about :

1. Feedback and data from smaller firms indicates that they meet 98% of their conveyancing clients.
2. Larger conveyancing practices (and I was previously involved with one) would see about 10% of their clients
3. And
   here is the big one….How many of the mortgage frauds that took place
   in the last 5 years did the lawyer meet the client face-to face ?

If
mortgage fraud was of such concern surely it’s time for the CML
handbook to require every lawyer to meet their client face to face.
Perhaps we need to revert back to the idea that mortgage deeds needed to
be witnessed. Call me a skeptic but I fear that such a change is
unlikely to happen as the large firms lobby would be up in arms. In
time, due to increased regulation and technology, there will be data
collected that overwhelmingly points to the need to meet all clients.
The shame is that by the time lenders realise this there may be very few
small firms around.